Years ago, conventional wisdom said potential home buyers should make a down-payment of 20 percent.

Doing so, the logic went, would help them secure a great interest rate and make monthly mortgage payments less costly.  These lower payments would help home buyers afford the expenses of home ownership — from closing costs to homeowner’s insurance to emergency funds.

But 20 percent down proved too large a hurdle for many potential homeowners as housing prices rose in the 1990s and beyond.

Today, large down-payments are nothing more than suggestions.

Source: The Mortgage Reports – Barbara Ballinger

Today, down-payment options from zero to 15% are completely reshaping the way people buy homes, especially first-timminimum-down-paymente home buyers.  Regardless of financial status, age, background, or nationality, home buyers are learning how to make a down-payment that suits their needs. They are no longer worried about adhering to outdated ideas about a “normal” down-payment.

There are equally good reasons for you to make a much smaller down-payment. By doing so, you retain available cash in the bank for emergencies, expenses, and other financial goals.

Conserve cash:  Many say that “cash is king”.  Experienced investors want to protect what they have and use the extra income to invest in other projects or the market.

Pay off debt: Many lenders advise using available cash first to pay off credit card debt. That debt is calculated at a higher interest rate than a mortgage and doesn’t offer the same tax deduction.

With debt paid off or lowered, you’re also likely to see your credit score climb. You need a minimum of between 640 and 680 to secure the most reasonable loan rates. Improve your score and hit 740, and you’ll secure an even better rate.

Tackle repairs: Having cash on hand will allow you to make essential repairs and upgrades. Few homes are so perfect that you move in without wanting to do some work.

piggy-bank-cashSet aside for an emergency:  Emergency funds are important to cover unforeseen repairs or other non-home related issues. If your car breaks down or furnace goes out, it’s better to have cash on hand rather than finance repairs with a credit card. That can lead to higher expenses later.

You can find the complete article here…..